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Real Estate Considerations in the Medical Marijuana Arena

When an entity or individual associated with medical marijuana is interested in purchasing or leasing real estate for their business, there are additional considerations that should be added to checklists and analyzed throughout the due diligence process in order to comply with the Ohio Medical Marijuana Control Program (“MMCP”) regulations.

#1 Location Restrictions:

Although the processing/testing/dispensing rules are not yet final, they are leaning to be in line with the cultivation license rules. ORC 3796.30 prohibits any medical marijuana cultivator, processor, or retail dispensary from being located within 500 ft. of the boundaries of any parcel of real estate located near a school, church, public library, public playground or public park. This does not mean 500 ft. from door to door, but parcel boundary to parcel boundary.

Dispensary rules will likely include an additional limitation prohibiting dispensaries from being located within 500 ft. of a community addiction services provider.

#2 Zoning Considerations:

House Bill 523 authorizes the legislative authority of a municipal locality or township board to adopt their own regulations to prohibit or limit the number of medical marijuana facilities within their locality. Often times, a locality will limit cultivators and processors, but not dispensaries, or some other combination of the three.

It is critical to check the local zoning rules of a proposed medical marijuana facility because the MMCP will require every applicant to provide evidence of compliance with all local ordinances, rules or regulations adopted by its locality.

#3 Evidence of Compliance:

If the processing and dispensing applications follow the cultivation license application, it is likely that the MMCP will require (or at least encourage) applicants to get a notarized signature from an individual representing the proposed facility’s locality. This is intended to show that the applicant is in compliance with the local zoning regulations, but can be tricky in localities that have been silent on the matter or are not yet prepared to authorize such a statement.

#4 Leases & Unclosed Purchases:

The owner of the real estate will likely need to sign off that there are no use restrictions on the property, or any lease restrictions in a leasehold, that would otherwise prevent the applicant from complying with MMCP regulations. If the applicant does not own the property, the applicant will most likely need to get their landlord and/or the owner of the property to sign and notarize a form in the application affirming that no such restrictions exist.

This can be tricky when the owner/landlord is an unrelated third party and is unclear on their position or intentions for the property in relation to the medical marijuana industry. Strategy and open communication should be utilized to avoid a situation where the deal is being held up due to a lack of signature.

The next few months will see many more questions and answers as Ohio rolls out final rules for medical marijuana processors and dispensaries.

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